Child Benefits in 2025. Guides to living in Germany. Germany is making important changes to child benefits and taxes to better support families and ease financial pressure caused by inflation. On Friday, December 20, the Bundesrat approved a new law that increases child benefits and adjusts tax rates to prevent families from losing income value due to rising prices.
Increase in child allowances from 2025
Starting in 2025, child benefits (Kindergeld) in Germany will gradually increase. Families will receive an extra €5 per month, raising the total to €255 per child. In 2026, the benefit will rise by another €4, reaching €259 per month. Additionally, the child supplement (Kindersofortzuschlag) for low-income families will increase from €20 to €25 per month. This aims to provide extra support for children and teenagers from families facing financial difficulties.
The child tax deduction limit will also see an increase. From January 2024, it will rise by €60 to €6,672 annually, and by 2026, it will go up by another €156 to reach €6,828 per year. According to estimates by the Green Party, a family with two children and an annual income of €60,000 will save around €306 next year due to these changes.
Read also: Bürgergeld (citizen’s allowance): New Payment Rates Starting January 2025
Tax measures
To address coldprogression—where salary increases meant to offset inflation result in higher taxes—the German government is adjusting key tax thresholds. In 2025, the minimum non-taxable income will rise by €312 to €12,096, and in 2026, it will increase further to €12,348. Additionally, other tax brackets will be adjusted by 2.6%, and the exemption from the solidarity surcharge will be extended. However, the threshold for the additional tax on high incomes will remain unchanged.
These adjustments will significantly impact government budgets. In 2025, federal states (Länder) are expected to lose around €2.6 billion in tax revenue, with losses rising to nearly €5.2 billion in 2026. Overall, federal, state, and local budgets face long-term revenue losses estimated at €14.8 billion.
Less money for households
Despite the planned tax relief, the German Institute for Economics warns that most households will still face financial pressure. Rising social security contributions will outweigh the benefits of the tax cuts for many people. For example, a single person earning €50,000 annually will see their net tax burden reduced by just €38 per year. The most significant benefits will go to married couples with children, with savings depending on their income level.
Although the law was passed before the year’s end, the impact of these tax cuts won’t be felt immediately. Administrative updates take time, so changes will only start appearing on pay slips in the coming months. However, the increased child benefits will be paid starting in January.
These measures are part of a broader government package aimed at easing economic pressures. Some proposals, like changes to the tax bracket system, were not approved due to political disagreements.